Glencore International AG v. M/s Shree Ganesh Metals & Anr.
(2025 INSC 1036, Supreme Court of India)

Introduction

In a significant ruling delivered on 25 August 2025, the Supreme Court of India addressed the perennial question whether an unsigned arbitration clause contained in a foreign-seated contract can nevertheless be binding when the parties have unmistakably performed the contract.

The appellant, Glencore International AG, a Swiss mining and commodity trading giant, and the respondent, M/s Shree Ganesh Metals, an Indian zinc-alloy manufacturer, had executed four earlier sale contracts (2011-12) – all with London-seated LCIA arbitration clauses. A fifth contract (“Contract No. 061-16-12115-S”) for supply of 6,000 MT of zinc during March 2016-February 2017 was exchanged by e-mail, signed only by Glencore, but acted upon by both parties: 2,000 MT were delivered, eight invoices were issued, and the buyer opened three Stand-by Letters of Credit (“SBLCs”) referencing that contract.

When disputes arose, Shree Ganesh sued in the Delhi High Court to restrain Glencore from invoking the SBLCs. Glencore invoked s. 45 of the Arbitration & Conciliation Act, 1996 (“the 1996 Act”) seeking reference to LCIA arbitration under clause 32.2 of the 2016 contract. A Single Judge (2017) and a Division Bench (2019) held that, since the contract was unsigned by the buyer, no arbitration agreement existed. Glencore appealed to the Supreme Court.

Summary of the Judgment

• Orders Set Aside: Both the Single Judge’s order (02-11-2017) and the Division Bench’s judgment (14-11-2019) were quashed.
• Existence of Arbitration Agreement Affirmed: The Court held that clause 32.2 constitutes a binding arbitration agreement despite the buyer’s missing signature, because (i) the buyer’s e-mails accepted the terms, (ii) both sides performed substantial parts of the contract, and (iii) SBLCs and invoices expressly referred to the contract number.
• Reference Directed: I.A. No. 4550/2017 is restored; the Delhi High Court must refer the parties to LCIA arbitration in London under s. 45 of the 1996 Act.
• Key Principle: For foreign-seated arbitrations governed by Part II, a prima facie written arbitration agreement may be inferred from the parties’ conduct and contemporaneous documents; a physical signature is not indispensable.

Analysis

1. Precedents Cited & Their Influence

1. Interplay between Arbitration Agreements & Stamp Act, In re (2024 SCC): Constitution Bench reaffirmed the Kompetenz-Kompetenz doctrine and held that the referral court’s role is limited to a prima facie examination. The Supreme Court relied on this to chastise the High Court for engaging in a “mini-trial” on contract conclusion.
2. Shin-Etsu Chemical Co. Ltd. v. Aksh Optifibre (2005 SCC): Followed for the proposition that courts under s. 45 conduct only a prima facie review; final determination is for the arbitral tribunal.
3. Govind Rubber Ltd. v. Louis Dreyfus Commodities Asia (2015 SCC): Signatures are not mandatory if a commercial document containing an arbitration clause is accepted and acted upon; explicitly applied to the facts.
4. Caravel Shipping Services v. Premier Sea Foods (2019 SCC): Clarified that s. 7(3) of the 1996 Act demands a written – not necessarily signed – arbitration agreement; the Court extended this logic to Part II foreign awards.
5. Precedents relied upon by the respondents – M.R. Engineers (2009) and NBCC v. Zillion (2024) – were distinguished because those dealt with incorporation of arbitration clauses from separate documents into domestic contracts, whereas in the present case the arbitration clause was embedded in the very contract that was performed.

2. Legal Reasoning Adopted by the Court

• Written Form Requirement Satisfied: Pursuant to s. 44, an agreement must be “in writing”. The signed contract, invoices, SBLCs, and e-mails collectively satisfied this requirement. Absence of the buyer’s signature did not negate the written record.
• Acceptance by Conduct: Performance (lifting 2,000 MT) and provision of three SBLCs were unequivocal acts manifesting assent to all terms, including arbitration.
• Limited Judicial Scrutiny under s. 45: The Single Judge and Division Bench erred by conducting an elaborate enquiry. Under s. 45, the court must refer unless the agreement is “null and void, inoperative or incapable of being performed,” which was not the case.
• Distinction from 2012 Contract: Reliance on the 2012 arbitration clause was unnecessary; clause 32.2 of the 2016 contract was independently valid.
• Commercial Efficacy Principle: Citing Govind Rubber, the Court preferred an interpretation that upheld, rather than invalidated, the bargain of commercially sophisticated parties.

3. Potential Impact of the Decision

This ruling has several ramifications for Indian arbitration jurisprudence, particularly under Part II:

• Reduced Formalism: It places substance over form, discouraging parties from escaping arbitration merely due to technicalities like missing signatures.
• Strengthens India’s Pro-Arbitration Stance: The decision aligns Indian law with international best practices embodied in the New York Convention (Art. II).
• Commercial Certainty: Parties who perform contracts can no longer repudiate the arbitration clause while enjoying contractual benefits.
• Banking & Trade Finance: The judgment shields SBLC beneficiaries from injunctive suits premised on alleged non-existence of arbitration agreements, thereby enhancing reliability of documentary credits.
• Guidance to Lower Courts: High Courts must resist extensive fact-finding at the reference stage; they must confine themselves to a prima facie inquiry.

Complex Concepts Simplified

Arbitration Agreement (Part II)

A written clause in a commercial contract that submits future disputes to arbitration seated outside India (thus governed by New York Convention and s. 44-52 of the 1996 Act).

Prima Facie Test under s. 45

The court examines only whether an arbitration agreement apparently exists; it does not finally decide validity. Doubts are resolved in favour of arbitration.

Kompetenz-Kompetenz

A principle allowing arbitrators to decide their own jurisdiction, including challenges to the arbitration agreement.

Stand-by Letter of Credit

A bank’s guarantee of payment upon presentation of specified documents. In trade, it secures the seller against buyer default.

Seat of Arbitration

The “legal place” whose procedural law governs the arbitration (here, London, UK).

Conclusion

The Supreme Court’s decision in Glencore v. Shree Ganesh Metals cements an important precedent: when sophisticated commercial parties act upon a contract containing a foreign-seated arbitration clause, they will be bound by that clause even if one party never physically signs the document. The Court re-affirmed the limited gate-keeping role of Indian courts at the reference stage under s. 45 and reinforced India’s pro-enforcement orientation under the New York Convention framework.

For future litigants, the message is clear: performance, correspondence, and banking instruments can together constitute “written” evidence of an arbitration agreement. Attempting to evade arbitration on hyper-technical grounds is unlikely to find favour, and Indian courts will lean towards upholding the parties’ bargain to arbitrate.